Millennial and Generation Z financial wealth jumped significantly in 2021, from $2.9 trillion to $3.6 trillion, the most of any generational cohort, says Cerulli Associates. This means providers ‒ long accustomed to serving Boomers and Generation X ‒ will need to focus on these younger households as they age and their financial pictures grow more complex. The second-largest generational cohort, but the smallest in terms of assets, Millennials and Generation Z have been able to grow their wealth in line with, or even better than, their older peers. This is due in part to Millennials seriously investing in retirement accounts and Generation Z dipping its toes in the investing water through brokerage platforms. As investors in this cohort make strides early on in their investment journey, they are eager for comprehensive financial advice and are willing to pay for it. Yet, while these ‘advice seekers’ know they want more out of their financial advice relationship, they have trouble defining exactly what they want. “Rather than strategically choosing from a logical menu of potential services from each provider, investors more often end up selecting providers on a just-in-time basis, resulting in ad hoc collection of relationships, each of which falls short of delivering comprehensive financial advice engagement,” says Scott Smith, a Cerulli director. To overcome this pitfall, providers must make every effort to anticipate the evolving needs of each client. As these investors accumulate more wealth, they will likely enter a stage of increasing financial complexity, navigating newfound challenges such as home ownership or saving for college education.
- PWC